translates to Rs. 0.23 p/kwh. On Naphtha we have a duty of 16% which translates to Rs. 0.40 p/kwh. Initially, an exemption was given to seven power stations after which NTPC approach the govt. and extension was given to NTPC’s gas based power station (Naphtha). We have been able to convince the govt. to withdrawn excise duty on Naphtha for the LNG fired stations of NTPC.
On sales tax, different states are charging different sales tax rates on fuels used in power sector. For coal it is 2% (Rs. 1.15 /Kwh) in UP, in MP it is 4% (Rs. 2.30/Kwh), for gas, the sales tax charged in Rajasthan is 4% (Rs. 3.12/Kwh) and in Gujarat it is significantly high 22% (Rs. 17.80/Kwh). For Naphtha, it is 4% (Rs. 8.38 / Kwh) in Rajasthan and 17.6% (Rs. 36.7/Kwh) in Gujarat.
In addition to sales tax the states also levy royalty on the coal mines within the state and supplied to power stations. The rates vary for each state and are also different for each grade. Also royalty is charged for gas supplied to power plants. On coal, rates for royalty vary from Rs. 50-95/MT which translates into Rs. 6.38/Kwh maximum. On gas the royalty is Rs. 212.70/1000 SCM which translates into Rs. 4.41/Kwh.
Other taxes and duties impacting the power utilities are dividend tax and duty on electricity. The dividend tax outflows on account of tax on dividend paid to govt. impacts the internal resource generation of companies like NTPC which plough back their profits for capacity additions and debt servicing.
State Electricity Duty (SED), is another component affecting the cost of power to the consumer. There is no uniformity in SED levied by the State govts. The govt. of AP & MP are levying excise duty on the sale of electricity outside the states. In 1992 NTPC had filed a case with the High Court against the levy on sales outside the states. The High Court decided that inter state sale of electricity should not be taxed by the state govt. where the power station is located. Ultimately a constitutional issue was taken to the Supreme Court and the Supreme Court has upheld the decision of the Andhra High Court saying that states cannot levy duty on electricity generated within the state but sold outside the state. The impact of electricity duty has considerably reduced after Supreme Court’s decision, which is limited to AP & MP only as far as NTPC is concerned. It was 3 paisa in MP.
Water Cess: There are different levels of water cess in different states. We have noted an interesting tendency of the state govts. with central power stations. When NTPC is establishing a power station, we get lot of support and